George Osborne rules out cuts and tax rises in the budget

George Orborne, the chancellor, has promised not to announce any new tax
increases or spending cuts in this week’s Budget.

Taxes levied on businesses will be simplified and reduced while planning law will be streamlined

By By Robert Winnett and Andrew Porter

7:00AM GMT 21 Mar 2011

The Chancellor said he had already “asked what is required” to turn the economy around.

He would now seek to “move on” and focus on securing economic recovery.

The promise will come as a relief to workers who already face increases in National Insurance next month and reductions in the higher-rate tax allowance, following the sharp rise in Vat at the beginning of the year.

These rises will still go ahead but the Budget overall will not raise any extra money.

Mr Osborne is hoping to promote this week’s statement as a “budget for growth” amid mounting concern over the fragility of Britain’s economic recovery.

In an interview yesterday, the Chancellor said: “Having undertaken the rescue mission last year, I don’t have to come back and ask for more this year.

“So I can say in the Budget this week I am not going to be asking for more tax increases or more spending cuts. We have asked what is required of the British people in last year’s Budget and that enables us in this year’s Budget to move on to putting in place the policies that will help Britain compete, help Britain create jobs and growth in the future.”

Mr Osborne confirmed that this will involve a rise in apprenticeships and work experience schemes for the young unemployed. He said he would expand university technical colleges to provide vocational skills. Taxes levied on businesses will be simplified and reduced while planning law will be streamlined to encourage enterprise.

A range of measures, including the air passenger duty freeze disclosed by The Daily Telegraph today, will also be introduced to help hard-pressed consumers.

Asked whether he will be able to postpone an imminent increase in fuel duty, Mr Osborne said: “Of course I am looking very carefully at that to see if I can afford to do something.”

The Treasury is also considering plans to offer further tax cuts to motorists to offset the impact of higher oil prices. Ministers are thought to have drawn up plans for a form of the fuel duty stabiliser – which cuts taxes when oil prices are high. There may also be steps to reduce tax avoidance by Britons living overseas and non-domiciled people based here.

Mr Osborne said the income tax threshold would rise for lower-paid workers – although this would be paid for by reducing the higher rate allowance.

The Budget is expected to downgrade official forecasts for economic growth this year.

Labour is expected to claim that spending cuts introduced by the Coalition have undermined the economic recovery.

Ed Balls, the shadow chancellor, said yesterday: “George Osborne’s plan is not working. We are not getting the jobs and growth we need to get the deficit down and deal with the competitive challenges. The question for the Budget, for George Osborne, is what will he actually do to get jobs and growth into our economy? So far, we have seen precious little.

“What’s happening in our economy now is because of his decisions to go too deep, too fast.”